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Joining A Marketing Club Could Increase Profits of Corn and Soybean Farmers

LARRY STALCUP | Nov 15, 2009

Iowa has some of the nation's most successful corn and soybean producers. Several hundred of them likely boost their marketing management savvy through a mega-marketing club that calls a small-town bank its home.

The Lynnville Marketing Club, hosted by the Lynnville State Bank in south-central Iowa, has swelled from a group of about 20 in 2000 to what might be the largest such club in the country, says Steve Johnson, Iowa State University (ISU) Extension farm management specialist in Altoona.

It grew out of two marketing clubs that merged and now has close to 500 participants and at least 100 who regularly attend meetings. Two who never miss a meeting and are instrumental in its success are Rich Roorda, a grower from Prairie City, IA, and landowner John Tomasek from Grinnell.

“I've gotten a lot out of it,” says Roorda, who tailors some of his corn and soybean sales around what he learns at the club meetings. “You get a better perspective and a look at the bigger picture.”

Adds Tomasek, “Farmers want marketing information as much as anything. Helping them become better marketers contributes to small-town economic development,” he says.

MARKETING CLUBS BECAME popular in the late 1970s, 1980s and into the 1990s. Most are supported by input from cooperative Extension economics departments like that at ISU. University of Minnesota (U of M) and Texas A&M University also offer a Master Marketer program that involves more than 60 hours of intense marketing training for growers who have some knowledge of using futures and options.

Close to 800 people have been through Master Marketer in Texas. Its value is illustrated by how it has helped the bottom line of its producer students. Texas A&M economists say the average increase in revenue of Master Marketer graduates is more than $32,000/year. Strong increases in profit have also been seen in Minnesota and other states.

Another 500+ people are Master Marketer grads from Minnesota, which now concentrates more on its Winning the Game program. “We still have a number of marketing clubs in Minnesota,” says Ed Usset, U of M Extension economist and Corn & Soybean Digest marketing columnist. “Producers see the value in them and keep them going.”

The Lynnville club meets monthly from November through April. There are also special meetings, such as those when noted agricultural marketing consultant John Roach is booked. Elwynn Taylor, ISU professor of ag meteorology, and Corn & Soybean Digest columnist Moe Russell have also been guest speakers.

The club includes growers stretching across nine counties, including Polk, Marshall, Tama, Iowa, Poweshiek, Jasper, Marion, Mahaska and Keokuk.

“We started adding agronomy, weather and other subjects to the club in 2003,” says Tomasek. “Growers learn from our presentations. They are from counties that are leaders in corn and soybean production. They are using things they learn from our club speakers.”

Roorda and Tomasek are members of the club leadership committee. It meets once or twice a year to plan a meeting calendar and determine which subjects to cover and speakers for them.

Each attendee pays $10 to help cover expenses for keynote speakers. Iowa county Farm Bureau branches pay half the tab for its members. “This isn't a Farm Bureau club, but it is a strong supporter of the program,” says Tomasek.

THE LYNNVILLE BANK and other regional banks, implement and seed dealers, co-ops and other entities also serve as sponsors. “This club has a lot of support from agribusiness through the area,” says Johnson, himself a speaker during the Lynnville club sessions.

Roorda credits the marketing information he receives from the club in helping make him a better marketer. He generally uses hedge-to-arrive (HTA) contracts to market corn and beans. They were especially attractive in 2008, when the huge price upsurge caused many grain companies to limit cash forward contacts to only a month or two out.

“With HTAs, I was able to lock in a futures price early on, then wait until the basis narrowed before locking it in,” says Roorda.

“From what I learned through the marketing club, I had a better understanding of the carry and storage costs and how they were calculated. That helped me know whether I should roll the HTAs out or set the basis and settle the contract,” he says.

Roorda adds that the club has used the Winning the Game program from the U of M, whose marketing workshops present preharvest and postharvest marketing strategies.

Tomasek says a popular part of the club meetings is halftime. “We take a half-hour break in the middle of a session so that growers and others can network and discuss what to do with their corn and soybeans,” he says. “Participants really like this opportunity.”

Tomasek is the biggest cheerleader for the club, delivering pamphlets, fliers and other promotional materials to some 160 locations in 38 cities and towns across the region. “We get the word out to about 540 people for every meeting,” he says. “The club is important to them and the communities where they farm.”

Usset says a successful marketing club survives because of good leadership. “It could be a producer, a local banker, a crop insurance guy or someone who wears both hats,” he says. “It must be someone who is committed to keeping it going, setting up the venue and what the programs will feature.”

He makes the argument that marketing clubs are needed because “marketing is more important today than it has ever been.

“The loan rate is a distant memory,” Usset adds. “I tell producers that the farm policy safety net will probably be smaller five years from now than it is now. Then there are the rising input costs. It's like the poker game that once had a 25¢ ante to play that's now $10. So producers need to become better marketers, and a marketing club can help.”

USSET NOTES THAT the Winning the Game program has taken the place of Master Marketer in Minnesota because it can reach more growers. “Master Marketer was a great program, but we find that Winning the Game is a more effective way to get the word out in a broader fashion,” he says.

For more on a marketing club in your region, contact your Extension economics department. For more on the Winning the Game program, go to www.cffm.umn.edu/wtg/.